STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Option Agreement") is
made and entered into this 19th day of July, 2000, between Twin
City Bancorp, Inc., a Tennessee corporation ("TCB"), whose
principal offices are at 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx
00000; and Citco Community Bancshares, Inc., a Tennessee
corporation ("Citco"), whose principal offices are at 000 Xxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, TCB and Citco are parties to the Agreement and
Plan of Merger dated ___________________, 2000 (the "Merger
Agreement") and terms not otherwise defined herein are as
defined in the Merger Agreement.
NOW, THEREFORE, in consideration of the premises, mutual
covenants and agreements contained herein and in the Merger
Agreement, and for the purpose of protecting the interests of
Citco in proceeding with the Merger, the parties hereto agree as
follows:
1. Option. Subject to the terms and conditions set
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forth in this Option Agreement, TCB hereby grants to Citco an
irrevocable option ("Option") to purchase up to 223,156 shares
("Option Shares") of Common Stock, $1.00 par value, of TCB
("Shares"), being 19.9% of the number of Shares outstanding on
the date of this Agreement before such issuance, at a purchase
price of $15.50 per Option Share (such price, as adjusted as
applicable, the "Purchase Price"). The number of Option Shares
that may be received upon the exercise of the Option and the
Purchase Price are subject to adjustment and other conditions as
follows:
(a) If not in Material breach of the Merger
Agreement and provided that no preliminary or permanent
injunction or other order against delivery of the Option Shares
issued by any court of competent jurisdiction shall be in
effect, Citco may exercise the Option, in whole or in part, at
any time or from time to time following the occurrence of a
Purchase Event (as defined below); provided that, except as
otherwise provided in this Option Agreement, the Option shall
terminate and be of no further force and effect upon the
earliest to occur of (i) the Effective Time, (ii) 15 months
after the first occurrence of a Purchase Event (or if, at the
expiration of such 15 months, after the first occurrence of a
Purchase Event, the Option cannot be exercised by reason of any
applicable judgement, decree, order, law, or regulation, thirty
(30) business days after such impediment to exercise shall have
been removed), or (iii) 18 months after the date of this
Agreement, although in the event a court or regulatory authority
order is in place that would prevent the exercise of the Option,
such date shall be extended for the period that such order is in
place. Termination of the Option shall not effect any rights
under the Merger Agreement which by their terms extend beyond
the date of such termination. As used herein, a "Purchase
Event" means the termination of this Agreement under any
circumstance which would or could entitle Citco to terminate
this Agreement pursuant to Sections 10.1 (b), (c), (d)(ii), or
(f) of the Merger Agreement; provided, that a Purchase Event
shall not occur unless and until TCB shall have entered into a
definitive agreement
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with a third party with respect to an Acquisition Proposal or an
Acquisition Proposal shall have been consummated during the 12
months following such termination of this Agreement.
(b) In the event Citco wishes to exercise the
Option, it shall send written notice to TCB of the date of the
closing of the exercise, which shall be not later than 20
business days from the date of the notice; provided, that such
closing shall be held only if (i) such purchase would not
otherwise violate or cause the violation of any applicable law,
rule, or regulation or any restraining order injunction, decree
or ruling issued by court or other governmental authority
prohibiting the delivery of such Option Shares, and (ii) any
prior notification to or approval of any regulatory authority
required in connection with such purchase shall have been made
or obtained. If the closing cannot be consummated by reason of
the restrictions set forth in this paragraph, the closing shall
be held within 10 days following the elimination of such
restriction.
2. Reserved Shares. TCB hereby represents and warrants
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to Citco that it is taking all necessary corporate and other
action to authorize and reserve and permit it to issue, and will
have reserved issuance at all times from the date of this Option
Agreement until the obligation to deliver Shares upon the
exercise of the Option terminates, upon exercise of Option,
Shares necessary for Citco to exercise the Option, and TCB will
take all necessary corporate action to authorize and reserve for
issuance all additional Shares or other securities which may be
issued pursuant to any change in the capitalization of TCB. The
shares to be issued upon due exercise of the Option, including
all additional Shares or other securities which may be issuable
upon exercise of Option pursuant to any change in
capitalization, upon issuance pursuant to this Option Agreement,
shall be duly issued, fully paid and non assessable, and shall
be delivered free and clear of all liens, including any pre-
emptive rights of any shareholder of TCB. In the event of any
recapitalization of TCB, appropriate adjustments will be made in
the Option Shares.
3. Repurchase. Not withstanding the other provisions
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of this Option Agreement, at any time commencing upon the first
occurrence of a Repurchase Event (as defined below) and ending
12 months thereafter, TCB (or any successor entity) shall:
(a) At the request of Citco, repurchase from Citco
the Option (if and to the extent not previously exercised or
terminated) at a price equal to the excess, if any, of (x) the
Applicable Price (as defined below) as of the Request Date (as
defined below) for a Share over (y) the Purchase Price (subject
to adjustment for any recapitalizations as described above),
multiplied by the number of Shares with respect to which the
Option had not been exercised (the "Option Repurchase Price");
and
(b) At the request of Citco, from time to time,
repurchase, all but not less than all of the Option Shares owned
directly or indirectly by Citco at a price equal to the
Applicable Price as of the Request Date multiplied by number of
Option Shares owned directly or indirectly by Citco (the "Option
Share Repurchase Price").
At any time following the occurrence of Purchase Event, TCB (or
any successor entity) may at its election, repurchase the Option
(if and to the extent not previously exercised or terminated) or
all but not less than all of the Option Shares at the Option
Repurchase Price or the Option Share Repurchase Price, as the
case may be. Any repurchase contemplated in this Option
Agreement shall
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be subject to receipt of any necessary regulatory approvals for
which the Parties shall use their reasonable efforts to obtain
promptly.
4. Definitions. For purposes of this Option
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Agreement, the following terms have the following meanings:
(a) "Acquisition Proposal" with respect to a Party
shall mean any tender offer or exchange offer for more than 25%
of the outstanding equity securities of such Party or any
proposal for a merger, acquisition of all of the stock or Assets
of, or other business combination involving such Party or any of
its Subsidiaries or the acquisition of 25% equity interest in,
or 25% of the Assets of, such Party or any of its Subsidiaries.
(b) "Applicable Price" as of any date means the
highest of (A) the highest price per Share paid pursuant to a
tender offer or exchange offer for Shares after the date of this
Agreement and on or prior to such date, (B) the highest price
per Share to be paid by any third party for Shares and each case
pursuant to an agreement with respect to an Acquisition Proposal
with TCB entered into on or prior to such date, or (C) the
highest bid price per Share as quoted on the National
Association of Securities Dealers Automated Quotations System,
or, if the Shares are not quoted thereon, on the principal
trading market on which the Shares are traded as reported by a
recognized source during the 60 days preceding such date. If
the consideration to be offered, paid, or received pursuant to
the foregoing clauses (A) or (B) shall be other than in cash,
the value of such consideration shall be determined in good
faith by an independent nationally recognized investment banking
firm selected by Citco and reasonably acceptable to TCB.
(c) "Repurchase Event" means the date that Citco
is entitled to terminate the Merger Agreement pursuant to
Sections 10.1 (b), (c), (d)(ii), or (f); provided, that a
Repurchase Event shall not occur unless and until TCB shall have
entered into a definitive agreement with a third party with
respect to an Acquisition Proposal or an Acquisition Proposal
shall have been consummated during the 12-month period following
such date.
(d) "Request Date" means the date on which TCB or
Citco, as the case may be, exercises its rights under this
Option Agreement.
5. Registration Rights. TCB shall, if requested by
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Citco at any time and from time to time within two years of the
first exercise of the Option, as expeditiously as possible,
prepare and file up to two registration statements under the
1933 Act if such registration is necessary in order to permit
the sale or other disposition of any or all Shares that have
been acquired by or are issuable to Citco upon exercise Option
in accordance with the intended method of sale or other
disposition stated by Citco, including a "shelf" registration
statement under Rule 415 under the 1933 Act or any successor
provision, and TCB shall use all reasonable efforts to qualify
such shares or other securities under any applicable state
securities laws. Any registration statement prepared and filed
under this Option Agreement shall be at TCB's expense except for
underwriting discounts or commissions, brokers' fees, and the
reasonable fees and disbursements of Citco's counsel related
thereto. TCB also will take reasonable efforts to list such
shares on any securities exchange or market where TCB's shares
are traded.
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6. Representation of Citco. This Option is not being,
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and any Option Shares or other securities acquired by Citco upon
exercise of the Option will not be, acquired with a view to the
public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Laws.
7. Amendment. This Option Agreement may be amended or
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supplemented at any time by mutual agreement of TCB and Citco.
Any such amendment or supplement must be in writing and approved
by their respective Boards of Directors and shall be subject to
the provisions of Article 10 of the Merger Agreement.
8. Entire Agreement. This Option Agreement, together
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with the Merger Agreement, constitutes the entire agreement
between the Parties hereto with respect thereto, written or
oral. Nothing in this Option Agreement, expressed or implied,
is intended to confer upon any Person, other than the Parties or
their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Option Agreement.
9. Assignment. Neither this Option Agreement nor any
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of the rights, interests or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Party.
Subject to the preceding sentence, this Option Agreement will be
binding upon, inure to the benefit of, and be enforceable by the
Parties and their respective successors and assigns.
10. Governing Law. This Option Agreement shall be
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governed by and construed in accordance with the laws of the
State of Tennessee applicable to agreements made and entirely to
be performed in such state, except to the extent federal law may
be applicable.
IN WITNESS WHEREOF, the parties hereto have caused this
Option Agreement to be executed in counterparts by their duly
authorized officers and their corporate seals to be hereunto
affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
CITCO COMMUNITY BANCSHARES, INC.
By:/s/ Xxx XxXxxxx, III
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Title: Chairman
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TWIN CITY BANCORP, INC.
By:/s/ Xxxx X. Xxxxxx
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Title: President
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